The Legacy Planning Table
At the planning table when the parents draw up the documents with advisors, who has a seat?
- Mother and Father
- Tax Attorney
- Financial Advisor
- Trust Officer
- Insurance Professional
- Business Valuation Expert
- Philanthropic Consultant
- Fundraiser/Planned Giving Officer
- Family psychologist or family facilitator
1 and 2 certainly. Most likely 3 and 4. Possibly 5. Very likely 6. Sometimes 7 . Rarely 8. Almost never 9. Seldom 10, though it may be a good addition.
How about the children, the grown heirs? Seldom or never, yet what a difference for the better it could make to include them before the plans are drawn. Children who are included will not "misread" the final documents as a critique of them. ("Daddy rules me from the grave through my trust officer because Daddy never loved me, never trusted me, and hated my boyfriend. He called my boyfriend a 'predator.' Why did Daddy do this to me? How did I deserve this? No one will ever love me for myself, only for my money. My peers just want to get a loan. No one can understand why I never had a job. Why should I work? My trust gives me more than I could ever make. I have done nothing all my life. I am a failure!") For jolting insights into the Boomer experience with inheritance, see the books documenting many heirs' experiences at The Inheritance Project)
Imagine that a family has $10 million. Imagine that if both parents die tonight that the scorecard is like this:
Plan A - Current
$7 million to children
$ 3 to the IRS
$ 0 to charity
Now imagine that with a little work it could look like this, a tax efficient plan.
$ 9 million to the children
$ 1 million to IRS
$ 0 to charity
Now imagine that it could also look like this.
$ 0 to IRS
$ 10 million to children: Some outright, some in trust, and some in a foundation they can manage.
Who is to say which of these plans, or many more, is "best"? Who is to say which is best for the children, and then the grandchildren down the line? Can parents makes these difficult decisions wisely without giving the grown children a seat at the planning table?
The Rising Generation
I am encouraged by what I see of Gen Y heirs. They have a healthier attitude about inherited wealth than did the Boomers who have filled shelves with books like "The Dark Side of Wealth," about the psychodrama of secrecy and family intrigue around inheritances and its lasting and devastating effect. The new generation is, I hear from its members, politely but persistently asking for their seat at the table when the planning that will impact their lives and their own children's lives is done.
Tip for Future Heirs
What follows is a "best practice" gleaned from an heir who shall remain nameless. She is very bright, a grad student at a top university, and "out" about her money. She is active in giving circles and in peer circles with other Gen Y philanthropically active heirs. Here is what she did: She had her own financial, estate, and legacy plan drawn up to deploy her own now paltry assets. She took that plan to her wealthy parents and said, "Well, here is my plan. May I see yours?"
Tip for Parents
Why not suggest your children do a financial, estate, and legacy plan for themselves. See how they do. Assist them only if they ask. Let them muddle through. Suggest they have you look at it and offer an opinion. Then, perhaps, you will be willing to share your plan. If you think about it, your child's plan will not change your life, but your plan will certainly change his or hers. As you reflect on the planning scenarios open to you, would your heir's input not be relevant? You can ignore his or her expressed wishes, and perhaps in some cases you should, but those wishes are relevant, and may outlive you, whether in joy or bitterness. You get the last word in the legal documents. The kids get the last word interpreting your life is family stories. Your legacy is more than money. Let it be more than ashes. Let it be wisdom, courage, and joy. Let how you do your plan, the virtues your planning process embodies, be the tradition that lives on in memory, imitated by your heirs and on down the line.
What Counts as Winning in Legacy Planning?
Lower taxes, transmission of family values, creation of autonomous adults, passing of business interests, the family's multi-generational impact on society? What counts as winning for you as parents, or as heirs, and how will you work towards the shared win that will unite the family, and help it stand for what you as a family know is right? A wise planning process maybe starts with open conversation among the stakeholders. If that is difficult, you can be sure that the reading of your will is going to be a tumultuous day. Why not face forward into the difficulties and resolve them as best you can while you are alive, before the attorney stands up in his dark suit, soon after your funeral, to read the legal language that will strike a chill in the hearts of those you love? There should be "nothing new" in the documents read at your death. The plan was made together; you pass the baton; and the race goes forward, generation by generation in love, joy, and forgiveness.
Fantastic post about how kids can get their parents to do their planning and communicate with the kids about it.
Just yesterday, I meant with parents brought into see me by their kids who had done their own planning and inspired the senior generation.
Thanks for this.
Posted by: Alexis Martin Neely | December 22, 2007 at 04:41 PM
Thank you, Alexis. Added you to the Resource list.
Posted by: Phil | December 22, 2007 at 05:27 PM
Posted by: tiasmith | June 24, 2009 at 06:40 AM
Pretty wells stated..
Posted by: Estate Planning | June 24, 2009 at 08:12 AM
By law, the attorney has a seat at the table as the only one who can issue legal opinions on specifc patterns of fact, or do legal documents embodying the client's intentions. Whether attorneys are the best adapted to the discussion of ideals - well, I think most attorneys would be happy to be relieved of that responsibility.
Posted by: Phil Cubeta | June 24, 2009 at 03:40 PM
Nice comment PBC.
Posted by: John Assam | June 25, 2009 at 01:05 AM
An estate tax attorney might ask, "Do you own the Buick or does your wife own that?" But will not ask, "What ideals will guide the distribution of your earthly possessions? What aspirations will animate your plan from now until death?" Thus, legacies are planned. "I own the Buick, but it is registered in TX. I live in PA. Does that make a difference?" To that the attorney will have an answer. The aspiration question, on the other hand, is not attorney work. So it goes unasked. That this relentless focus on merely materialistic concerns in planning for death is not considered malpractice surprises me. Goals in planning do matter. Goals stem from needs, wants, and also aspirations. Not to touch on those is, well, how attorneys do it.
Posted by: Phil Cubeta | June 25, 2009 at 05:53 PM
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Posted by: Estate Planning | June 27, 2009 at 05:31 AM
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Posted by: Estate Planning | June 27, 2009 at 05:34 AM